Banking giant UBS is buying its smaller rival Credit Suisse in an effort to avoid further market-shaking turmoil in global banking, Swiss President Alain Berset announced on Sunday night.
Berset called the announcement "one of great breadth for the stability of international finance. An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system."
"We noted that the outflows of liquidity and the volatility of the markets demonstrated that necessary confidence could no longer be restored, and a rapid solution guaranteeing stability was essential." The Swiss central bank has agreed to provide a loan of 100 billion Swiss francs backed by a federal default guarantee to support the deal, which is expected to be completed by the end of the year.
Marenzi added he expected Switzerland's direct democracy governmental model is likely to result in court and ballot challenges for this deal, potential leading to more chaos. The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn't invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10%.
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Banking giant UBS is acquiring smaller rival Credit SuisseBanking giant UBS is buying its smaller rival Credit Suisse in an effort to avoid further market-shaking turmoil in global banking, Swiss President Alain Berset announced on Sunday night.
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